Supreme Court Blocks Climate Change Suit Against Utilities

On June 20, 2011, the U. S. Supreme Court issued its decision in American Electric Power Co., Inc. et al. v. Connecticut et al., 564 U.S. ____ (2011).  In this closely-watched case, eight states and three land trusts sought to impose limits on greenhouse gas emissions from five major electric power companies on the grounds that those emissions were a violation of federal common law because they contributed to global warming.  The Supreme Court held that any federal common law right to seek to control such emissions judicially was displaced by the Clean Air Act and the authority to regulate greenhouse gas emissions provided therein to the U.S. Environmental Protection Agency (EPA).  In an 8-0 decision authored by Justice Ginsburg, the Supreme Court overturned the Second Circuit's ruling that the Clean Air Act did not displace federal common law on this issue.  The Second Circuit's decision was based in part on the fact that the EPA had not yet promulgated its rules regulating greenhouse gas emissions.  (Justice Sotomayor did not take part in the Supreme Court's decision on this case because she sat on the Second Circuit at the time that it issued its decision.)  The Supreme Court disagreed, stating that the critical point was "that Congress delegated to EPA the decision whether and how to regulate carbon-dioxide emissions from power plants; the delegation is what displaces federal common law."  The fact that EPA had not yet exercised that authority by issuing final regulations (EPA has committed to issue a final rule by May 2012) did not negate the delegation - or the displacement of federal common law.  The court went so far as to state "[i]ndeed, were EPA to decline to regulate carbon-dioxide emissions altogether at the conclusion of its ongoing §7411 rulemaking, the federal courts would have no warrant to employ the federal common law of nuisance to upset the agency's expert determination." 

The Court reviewed the subject of federal common law and its application to environmental issues and noted that the test for whether federal legislation displaces federal common law is whether the statute "speaks directly" to the question at issue, citing Mobil Oil Corp. v. Higginbotham, 436 U.S. 618, 625 (1978).  Citing its prior decision in Massachusetts v. EPA, 549 U.S. 497 (2007), the Court said it was plain that emissions of carbon dioxide qualify as air pollution subject to regulation under the Clean Air Act and that it was equally plain that the Act "speaks directly" to emissions of carbon dioxide from the defendants' power plants.  The Court went on to point out that EPA is better suited to regulate greenhouse gas emissions than individual district court judges "issuing ad-hoc, case-by-case injunctions" without the benefit of the scientific, economic and technological resources that EPA could utilize. 

While the Court was unanimous in its ruling on EPA's occupation of the greenhouse gas regulatory realm, Article III standing was affirmed only by a divided Court.  Specifically, the Court split 4-4 on the potentially key legal issue of whether federal courts have jurisdiction to hear such suits, or whether they are barred by the political question doctrine.  The split here means that the Second Circuit finding that the suits could proceed stands, although that ruling does not apply to other federal circuits.

Going forward, it should be noted that the Supreme Court did not address whether the plaintiffs could obtain relief under state nuisance law.  The Second Circuit did not address the state law claims because it decided the issue based on federal common law.  The Court therefore left the potential availability of a claim under state nuisance law open for consideration on remand.  As a result, the Supreme Court's decision will not mean an immediate end to nuisance claims over climate change.  And in the meantime, EPA's Section 7411 rulemaking should continue to be watched closely as EPA attempts to fulfill its commitment to issue a final rule by May 2012.  

If you have questions about this decision or its potential impacts on your business operations, please contact Buzz Hines or John Epperson or any of the environmental attorneys at Farella Braun + Martel.